UPDATE 2-Embarq posts lower quarterly profit

(Adds analyst quote, share details)

NEW YORK, Feb 7 (Reuters) - U.S. telecommunications service provider Embarq Corp (EQ.N: Quote, Profile, Research) said on Thursday it posted a lower quarterly profit as it lost phone line customers, but the company's outlook was better than some analysts expected.

Like bigger U.S. wireline providers Verizon Communications Inc (VZ.N: Quote, Profile, Research) and AT&T Inc (T.N: Quote, Profile, Research) Embarq is facing phone losses amid competition from cable companies and a tendency by consumers to switch to wireless-only services.

But Stanford Group analyst Michael Nelson said Embarq's numbers, including its 2008 cash flow guidance and its line- losses looked strong, despite the U.S. economic slowdown, which AT&T said had cost it some customers.

"They're operating in difficult market so the fact they could stem some line losses and generate free cash flow is positive," said Nelson, adding that Embarq's 91,000 line losses compared well to his estimate for 105,000.

Embarq, the wireline spin off from No. 3 U.S. mobile service Sprint Nextel Corp (S.N: Quote, Profile, Research) forecast 2008 cash flow before dividends would increase between 3.1 percent and 7.5 percent to a range of $950 million to $990 million.

Nelson had expected an increase of 1 percent.

Embarq's profit fell to $190 million, or $1.23 per share from $194 million, or $1.28 a share in the year ago quarter.

Revenue fell to $1.58 billion from $1.62 billion.